There is no statutory minimum wage for the entire country at present. A number of sectors or industries are regulated by sectoral or ministerial determinations and in some instances by the extension of bargaining council agreements to non-members.
The editorial Cosatu’s suicidal wage proposal first published in Business Day and BDlive today derides Cosatu’s proposal to push for a national minimum wage of about R4,500 a month. Courtesy of Business Day here are some random extracts but the entire editorial needs to be read.
IT IS hard to believe that the Congress of South African Trade Unions’s (Cosatu’s) latest call to do away with sectoral minimum wages in favour of an across-the-board basic minimum wage is anything more than a bid for attention ahead of next week’s national congress.
In the wake of the Marikana killings, Cosatu general secretary Zwelinzima Vavi has said the organisation needs to return to its core objective — the advancement and protection of its members in the workplace. Discussion papers prepared for the conference suggest that the push to introduce a national minimum wage of about R4,500 a month is part of this strategy.
The congress could be a turning point in the union’s relationship with its allies, the African National Congress (ANC) and the South African Communist Party. There has been increasing tension in the alliance over leadership and economic policy, particularly labour broking and the proposed youth wage subsidy. Mr Vavi has said that, by focusing on political gains rather than wages, the union is failing its members. It is in this light that the proposal has been made.
Although there is limited evidence internationally suggesting the relationship between employment and minimum wages is not always negative, the results of a recent report by the University of Cape Town’s Development Policy Research Unit indicate that this has indeed been the effect in the domestic farming sector.
If these results can be generalised to other sectors, they provide damning evidence against the existing minimum-wage structure and even more so against the introduction of a national minimum wage, as suggested by Cosatu. Apart from the negative social and economic effects, a reduction in employment as a result of the increased burden placed on employers by a minimum wage is not in the union movement’s long-term interests. The unemployed already outnumber union members in SA, and further job losses will just mean still fewer members.
Sectoral minimum wages already struggle to cater for significant differences in corporate profitability within individual sectors — miners of different commodities, for example, or rural versus urban clothing factories. The price floor must necessarily be set below the market-clearing level of the most profitable firms in the most profitable sectors if unemployment is not to result in the least profitable sectors. Either way, the R4,500 proposed by Cosatu is certainly well above what firms in the least profitable and moderately profitable sectors of the South African economy can afford.
Cosatu’s proposal would place both firms and the workers they employ at risk. While it will undoubtedly be passed at next week’s conference, for the ANC to follow suit at the end of the year would be suicidal in the long run.